Archive for November, 2006

Just one more Friedman

Chatter builds around the suggestion that security control of Basra might be handed over in early 2007. We’ve had quite a lot of this stuff before, tales that significant reductions in force might occur in six months’ time (one Friedman) and more recently announcements that such-and-such a province has been “handed over”.

What we haven’t had is beef. “Handing over security control” of a province appears to entail a flag-swap outside some prominent building and a new job title for the local Sadrist, Fadhila or SCIRI boss. But so far, none of the handovers have involved the withdrawal of even one single soldier. This time, Des Browne has suggested that troop numbers might be lower “by thousands” at the end of 2007.

There may be some evidence that this has a slightly higher reality content than past promises. I hear that the Shaibah logistic base outside Basra is going to close “early in 2007″ with the services and installations being transferred to the RAF’s Basra Air Station. That, to me, sounds like clearing the decks – reducing the number of bases and perhaps the number of logistics personnel, whilst concentrating around the APOD (Aerial Point of Departure).

Big SD cards

Zawinski reports trouble with a 4GB SD card and a Treo 700p gadget. I am not very surprised, although for other reasons. Earlier this year, I was offered a Qtek S200 Windows Mobile PDA, and I transferred a 1GB Mini-SD loaded with photos, Stone Roses and Steely Dan songs to it. Within the week it had somehow managed to destroy the card and everything that sailed in it. Not the gadget I had before, nor a HP 6915w, nor a USB cardreader in a Mac could even detect the card’s presence. Caveat emptor.

Why, asks Chris Dillow, do we consider Milton Friedman a man of the Right? Dillow was thinking of such things as the earned-income tax credit and his opposition to conscription, but the question requires some unpacking. I don’t believe, for example, that his concern with liberty is incompatible with the Left. Neither is it impossible to imagine a leftwing critique based on ownership and control, rather than markets versus planning. I certainly agree with him on floating exchange rates, and on the legalisation of drugs.

But all these things – which so many people chose to pick up on when commemorating his death – were sideshows at best to his main achievement, monetarism. Like few other economic doctrines, monetarism was actually tested and met with shattering empirical refutation. The US Federal Reserve lasted three years before kicking the habit. In the UK, the experiment went on until 1986, by which time the government and the Bank had successively failed to control all the main monetary aggregates. Inflation had been forced down, but at the cost of high unemployment – not only is this what the Phillips curve suggested would happen, it arguably happened for the reasons a Keynesian would have predicted it would happen.

The British government applied fiscal and monetary tightening, raised the rate of interest, and permitted sterling to appreciate – and guess what, aggregate demand tanked, unemployment soared and prices eventually fell. Eventually, Alan Walters and Charles Goodhart convinced the government to ditch monetarism. Instead it chose an exchange-rate targeting regime, learnt the hard way just as it had with monetarism, and finally arrived at final-goal symmetrical inflation targeting. We live not in a monetarist world, but a New Keynesian one, where although the preferred policy tools are monetary, the thinking is demand-driven (something that has become much more important with the growth of customer credit).

There is part of your answer, then. In practice, Friedman’s doctrine put hordes of workers out of work, and we are still struggling with the social impact. Now the North Sea oil years are behind us, we shall miss the export industries that went to the wall in the combined sterling hike and credit squeeze. But what about the other side? Well, it’s very notable that none of the politicians he hawked his ideas to ever wanted to them put into practice, beyond simply squeezing the poor until the pips squeaked. Certainly, he thought it would be better to provide public services as cash or quasicash (vouchers) and let the market sort out how they are organised. But who ever saw any of the money? As with so many self-described libertarians, this was left as an exercise for the creative imagination. Rather than the NHS, let’s have fully-funded healthcare vouchers for all…and a pony.

There is, however, a seriously inspiring lesson ex Friedman, now we need new ideas. We urgently need some new ones – how, for example, to shape a politics against managerialism and elite consensus? How to assault inequality without Polly Toynbee-esque control bureaucracy? He was never elected to anything, and never owned much capital himself. He commanded only his pen, but changed the world. Ideas still count.

This is very bad news from Baghdad, via perfect.co.uk, but note some details. For a start, a neat primer on modern urban warfare:

On Saturday, the Web site displayed a recipe for civil war. It recommended protecting Sunni neighborhoods by “spreading snipers on the roof of buildings,” planting roadside bombs at neighborhood entrances and distributing grenades. It advised “antitank missile holders” to make trenches and to attack the first and last vehicles of any convoy.

At the end were instructions for preparing ambushes by “attracting the enemy by using small cars as bait so they would chase them and be dragged to the killing zones.”

It’s the full Grozny toolkit – snipers on the rooftops, RPG teams in the shopfronts, set up and fight the vertical battle. Note also the mystery flood of SMS messages – I wonder whether this is simply a social cascade attack, as fear spreads like a virus, or do the insurgents have access to the Cell Broadcast interface on the GSM networks? In a sense it doesn’t matter which insurgents – fear and hate-mobilisation work as well for both sides. You could well find it useful to spread terror on your own side.

Back in July, Charlie Stross floated the idea that “it’s not virtual reality until you can stage a coup in it.” Perhaps the bandwidth required for such a thing is far less that we assumed – SMS seems quite effective, and that will work at 9.6Kbits/s. Alternatively, it’s easier to hack society at the human level – it’s not the medium, but the message in this case. As long as there is sufficiently credible fear/revenge floating through the memepool, it’s of secondary importance how it is transmitted – what matters is the mesh network topology, which means the spread has increasing returns to scale.

Why, asks Chris Dillow, do we consider Milton Friedman a man of the Right? Dillow was thinking of such things as the earned-income tax credit and his opposition to conscription, but the question requires some unpacking. I don’t believe, for example, that his concern with liberty is incompatible with the Left. Neither is it impossible to imagine a leftwing critique based on ownership and control, rather than markets versus planning. I certainly agree with him on floating exchange rates, and on the legalisation of drugs.

But all these things – which so many people chose to pick up on when commemorating his death – were sideshows at best to his main achievement, monetarism. Like few other economic doctrines, monetarism was actually tested and met with shattering empirical refutation. The US Federal Reserve lasted three years before kicking the habit. In the UK, the experiment went on until 1986, by which time the government and the Bank had successively failed to control all the main monetary aggregates. Inflation had been forced down, but at the cost of high unemployment – not only is this what the Phillips curve suggested would happen, it arguably happened for the reasons a Keynesian would have predicted it would happen.

The British government applied fiscal and monetary tightening, raised the rate of interest, and permitted sterling to appreciate – and guess what, aggregate demand tanked, unemployment soared and prices eventually fell. Eventually, Alan Walters and Charles Goodhart convinced the government to ditch monetarism. Instead it chose an exchange-rate targeting regime, learnt the hard way just as it had with monetarism, and finally arrived at final-goal symmetrical inflation targeting. We live not in a monetarist world, but a New Keynesian one, where although the preferred policy tools are monetary, the thinking is demand-driven (something that has become much more important with the growth of customer credit).

There is part of your answer, then. In practice, Friedman’s doctrine put hordes of workers out of work, and we are still struggling with the social impact. Now the North Sea oil years are behind us, we shall miss the export industries that went to the wall in the combined sterling hike and credit squeeze. But what about the other side? Well, it’s very notable that none of the politicians he hawked his ideas to ever wanted to them put into practice, beyond simply squeezing the poor until the pips squeaked. Certainly, he thought it would be better to provide public services as cash or quasicash (vouchers) and let the market sort out how they are organised. But who ever saw any of the money? As with so many self-described libertarians, this was left as an exercise for the creative imagination. Rather than the NHS, let’s have fully-funded healthcare vouchers for all…and a pony.

There is, however, a seriously inspiring lesson ex Friedman, now we need new ideas. We urgently need some new ones – how, for example, to shape a politics against managerialism and elite consensus? How to assault inequality without Polly Toynbee-esque control bureaucracy? He was never elected to anything, and never owned much capital himself. He commanded only his pen, but changed the world. Ideas still count.

This is very bad news from Baghdad, via perfect.co.uk, but note some details. For a start, a neat primer on modern urban warfare:

On Saturday, the Web site displayed a recipe for civil war. It recommended protecting Sunni neighborhoods by “spreading snipers on the roof of buildings,” planting roadside bombs at neighborhood entrances and distributing grenades. It advised “antitank missile holders” to make trenches and to attack the first and last vehicles of any convoy.

At the end were instructions for preparing ambushes by “attracting the enemy by using small cars as bait so they would chase them and be dragged to the killing zones.”

It’s the full Grozny toolkit – snipers on the rooftops, RPG teams in the shopfronts, set up and fight the vertical battle. Note also the mystery flood of SMS messages – I wonder whether this is simply a social cascade attack, as fear spreads like a virus, or do the insurgents have access to the Cell Broadcast interface on the GSM networks? In a sense it doesn’t matter which insurgents – fear and hate-mobilisation work as well for both sides. You could well find it useful to spread terror on your own side.

Back in July, Charlie Stross floated the idea that “it’s not virtual reality until you can stage a coup in it.” Perhaps the bandwidth required for such a thing is far less that we assumed – SMS seems quite effective, and that will work at 9.6Kbits/s. Alternatively, it’s easier to hack society at the human level – it’s not the medium, but the message in this case. As long as there is sufficiently credible fear/revenge floating through the memepool, it’s of secondary importance how it is transmitted – what matters is the mesh network topology, which means the spread has increasing returns to scale.

J.D> Henderson chez Intel Dump writes that General Abizaid should be relieved of his command. But first, he says, he respects Abizaid for the courage he showed in his past career. Fair enough.

But there is some historical evidence that extremely brave generals are a bad idea. Consider the British experience – we brought several First World War heroes into the second world war, and most were terrible. Gort was a VC holder, and was uninspired at best. Philip Neame was another VC and was a disastrous numskull. Of course, I’m wrong – Freyberg was a VC and a damn good general, Alexander was a multiple DSO and a damn good general. Upshot? Courage doesn’t predict ability.

Maybe I should do a Sunday General, like Rob Farley’s Sunday Battleship Blogging..

J.D> Henderson chez Intel Dump writes that General Abizaid should be relieved of his command. But first, he says, he respects Abizaid for the courage he showed in his past career. Fair enough.

But there is some historical evidence that extremely brave generals are a bad idea. Consider the British experience – we brought several First World War heroes into the second world war, and most were terrible. Gort was a VC holder, and was uninspired at best. Philip Neame was another VC and was a disastrous numskull. Of course, I’m wrong – Freyberg was a VC and a damn good general, Alexander was a multiple DSO and a damn good general. Upshot? Courage doesn’t predict ability.

Maybe I should do a Sunday General, like Rob Farley’s Sunday Battleship Blogging..

It’s been a weird political week, no? There was “Loyalist” (scarequotes included because my definition of loyalty doesn’t include shooting fellow citizens, constables & c) nutbag Michael Stone’s public freakout-cum-terrorist attack on Stormont. I haven’t laughed as much in years – seriously, ten years ago this would have meant blood in the streets, all 39 Brigade leave cancelled, Belfast burning. These days he gets pistolwhipped with his own gun by a woman who isn’t even officially a security guard and publicly ridiculed. It’s progress of a sort. Slugger was of course all over the story, and has the details on his motive: apparently he wanted to be put in a cell for his own safety. It’s also progress that you can barge into Stormont with a gun to get yourself arrested, rather than simply shot.

I rather liked the commenter who suggested that the whole thing was an exercise in performance art by the amateur painter Stone, designed to mock the NI politicians’ desperate efforts to get the world’s attention.

Much more depressing is the death of Alexander Litvinenko. The Viking catherd has details on polonium-210 and comments that it was “a curiously elegant and vicious assassination method”. Indeed. The horror of it should be argument enough against the notion that he administered the poison to himself to discredit Vladimir Putin. Suicide-bombers, after all, go out in an instant, and self-immolation (Buddhist/Prague style) is both easier to arrange and more publicly theatrical. And where would he have laid hands on enough of the stuff? Any theory of his assassination must first climb the mount improbable of his killer having access to something found only in quantity in a nuclear reactor or linear accelerator, and in a form pure enough to be handled safely and innocuous enough to be administered easily.

Steinn points out that, at least within the US, small quantities of it are on open sale, but the amount required to kill would have cost $500,000, not to mention being a very noticeable sale. George “Dick Destiny” Smith points out that half a gram in a capsule would reach 500 degrees Celsius – “Litvinenko was cooked from the inside”.

There is something about this story, though, that almost makes the suicide theory plausible – the rainswept November streetscapes of London and the doomed radioactive exile wandering towards death through the flickering mobs of Christmas shoppers. There have always been exiles and foreign secret policemen conspiring in obscure corners of the city, and Litvinenko’s death is almost uncannily fitted to the genius loci. I am reminded of “The Professor”, the prototype suicide bomber and proto-fascist in Conrad’s Secret Agent, who carries an explosive charge triggered by a pneumatic bulb in the sleeve of his jacket, ready to blow himself up if arrested. In conversation with a comrade, he lets slip that the fuse is not instant – twenty seconds must elasp before the explosion, to the comrade’s utter horror and astonishment.

But a suicide-weapon that means not seconds, but weeks of irreversible radiation sickness, is innately improbable. The Government, of course, is desperately hoping against hope that it was anyone, anyone but Gazprom the Russians.

There seems to be an increasing belief around that we’re still in Iraq because the UK/USA leaders can’t bring themselves to book a loss, as Ezra Klein puts it over at Tapped. David Kurtz at TPM argues similarly that Bush thinks the only way the US can be defeated is if it chooses to leave Iraq. He blames this on Henry Kissinger, which if true is wildly out of character, and compares the situation to that of a very wealthy man who owns a lossmaking business – he can, if he so chooses, keep covering the loss from his own funds, and he might convince himself that the business will eventually succeed if he just hangs on long enough.

Back in February, the mighty Chris Dillow made some interesting comments about Iraq and sunk costs. Chris pointed out that in some circumstances, the sunk-cost fallacy might be rational – for example, “staying the course” in Iraq might signal determination to our enemies, or on the other hand, worrying about the 2,800 dead soldiers might be an effective way of signalling to oneself that decisions have consequences.

Victor Davis Hanson is apparently peddling the first of these two arguments, which should tell us something. After all, as I think Dsquared says, past performance *is* a guide to future performance when it comes to individuals. VDH’s point – that fighting on in Iraq might shore up our deterrent credibility – could be sensible, if it wasn’t for the continuing costs. Our enemies can be expected to measure us by capability as well as intention. Whilst the US Army and Marine Corps are mired in Iraq, the US (and the UK) has little substrategic deterrent credibility, to say nothing of the financial cost. It will take time to restore the fabric of the army after the war, too. And, vitally, any cost-benefit analysis has to take into account the risk that things will get much worse – that we will get a serious kicking. The danger of this is rising steadily: Sadrists seize the TV station, this after last week’s insurgent reconnaissance-in-force of the Health Ministry, which is just over the bridge from the Green Zone, the car bomb inside the Zone on Monday, and the Sadr City massacre. (Did you know they think the bomb was made inside the Zone?)

But, it seems, the mindset is that as long as it’s not formally signed off as a loss, it don’t exist. Enron used to do this. As the end of the quarter approached, by which time they needed to publish results showing steady profits growth to satisfy the stock market, there would be a frantic review of contracts. If a deal was dead, then the costs involved would have to be booked that quarter. But if there was the slightest hope, or at least someone was willing to sign their name to saying there was the slightest hope, of it eventually completing, then it didn’t need to be accounted for then. Mark-to-market accounting meant that anything that was profitable (or rather, was predicted to be profitable) would be accounted for at the first possible moment – hey presto, stellar results.

But, of course, the toxic waste didn’t go away, and the very real costs involved were, well, real – although they could be temporarily kept out of the profit and loss accounting, they consumed actual cash from the cash flow, just as Iraq has real consequences that aren’t dependent on whether or not we accept them. When I last reread Bethany McLean and Peter Elkin’s The Smartest Guys in the Room, one thing leapt out at me: Enron’s culture neatly prefigured the last six years. It wasn’t just that it was a scandal associated with George Bush, but the culture of it was identical. The same dominant narrative (Enron is a roaring success/GWB’s policy is a roaring success) flogged, despite flying in the face of publicly available facts, to the public with the help of uncritical intermediate institutions (Wall Street and Andersens/the New York Times) and the demonisation of critics (Skilling’s bully rhetoric and manipulation/the troll industry), the same unpleasant language of sexual violence people on LGF and Free Republic are addicted to, the delusions held together for internal consumption by groupthink and mutual reinforcement, and of course the corruption.

Also, the fundamental incompetence at everything but propaganda. Rumsfeld’s DOD couldn’t find enough body armour, Enron Energy Services couldn’t issue accurate bills to its customers or even cash their cheques. Bush didn’t know there was a difference between Shi’ites and Sunnis, Enron Broadband thought you could transfer spare capacity between physically separate DSL lines without using a backhoe. If you haven’t read it yet, you’d better. The denial, too – there is still a lobby that Enron was really a good business, just as John Hinderaker still claims to think Iraq isn’t really more dangerous than Washington DC. Well, if all those marked-to-market contracts from 1991 to 2001 really had been profitable, Enron would have had more than $500 million net cashflow less trading collateral and trades with self in 2000, as the already-booked profits arrived as cashflow.

And if Iraq wasn’t really violent, you wouldn’t be able to light up a government ministry within half a klick of the Green Zone with your whole platoon and get away with it. Neither would the members of parliament want to bring the Kurdish army into Baghdad, because they don’t trust any other troops.





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